CHAPTER II

PRE-WAR PRINCIPLES AND METHODS

Prior to the World War, thought and practise relative
to the determination of wages in the United States were
entirely different from the situation at the present time.
Small progress had been made beyond the century-old
“Iron Law of Wages” as originally worked out by the
English classical economists. With the exception of the
general theory of “Supply and Demand,” there were in
practise no definite principles or accepted standards for
the determination of wage rates. Labor, in relation to its
compensation, in other words, was generally—altho perhaps
 unconsciously—viewed as a commodity whose value
was determined by the interplay of the forces of supply
and demand. Altho such a conception as to fixing the
price of labor would not always be acknowledged or openly
avowed, nevertheless, as a matter of practise, it was a rule
subconsciously present and usually followed. Labor’s
value was generally looked upon and determined in the
same way as that of purely physical commodities, such as
wheat, coal, iron, textiles and steel products. Very little
attention, in a practical way, had been given prior to 1914
to the human and ethical elements in the wage problem.

TrHE So-CaLLED “LAW” oF SupPLY AND DEMAND
From this view-point, the rate of pay to industrial
workers at any time was to be determined by placing the
supply of labor over against the demand for labor. The
going price for labor was the result. In the event of any
dislocation to or collapse in industry, the wage-earners
were the residual sufferers. The evils arising from unre-